Question

Suppose the following two events occur in the market for elementary school teachers: a. Overcrowded schools and education budget cuts have discouraged young college students from pursuing careers in teaching. b. With an increasing birth rate, the number of children entering the elementary school system is expected to increase significantly over the next ten years. What is likely to happen to the equilibrium wage and quantity of teachers as a result of these two events

Answer 1

The equilibrium wage will rise, while the equilibrium quantity of teachers will be indeterminate as a result of these two events.

Step-by-step explanation:

Event a. will result in a fall in the supply of teachers, while event b. be will result will in the increase in the demand for more teachers.

Therefore, lower supply of teachers and the higher demand will result in the increase in the equilibrium wage of elementary school teachers.

However, since lower wage in not what discouraged young college students from pursuing careers in teaching, but the overcrowded schools and education budget cuts, the effect of events a. and b. on the equilibrium quantity of teachers will be indeterminate.

Therefore, equilibrium wage will rise, while the equilibrium quantity of teachers will be indeterminate as a result of these two events.